UNITED STATES MARITIME COMMISSION REPORT TO CONGRESS FOR THE PERIOD ENDED OCTOBER 25 1939 UNITED STATES GOVERNMENT PRINTING OFFICE WASHINGTON r 1940 For sale by the Superintendent of Documents Washington D C Price 10 cents UNITED STATES MARITIME COMMISSION OFFICE COMMERCE BUILDING WASHINGTON D C COMMISSIONERS EMORY S LAND Chairman EDWARD C MORAN Jr MAX ORELL TRUITT HENRY A WILEY THOMAS M WOODWARD W C PEET Jr Secretary TABLE OF CONTENTS Page Introduction 1 Organization 2 Studies and investigation 2 Legislation 2 Rules and regulations 3 Vessel construction 4 Longrange program 4 Present construction 5 Constructiondifferential subsidy 9 Operating differential subsidy agreements 10 Labor standards 11 Aid to vessels over 20 years of age 13 Training program 35 Insurance 17 Federal ship mortgage insurance 20 Litigation and claims 20 Exercise of regulatory functions 22 Formal docket 22 Shortened procedure 25 Informal docket 25 Special docket 25 Interstate filings 26 Agreements filed under section 15 Shipping Act 1916 26 Foreign rates and bills of lading 27 Transfer of vessel registry and sales to aliens 28 Governmentowned lines 29 Laid up fleet 31 Terminals 32 Appendix ABalance sheet June 30 1939 83 Appendix A1 Summary of income and expenses and chargee July 1 1938June 30 1939 34 Appendix BAppropriations transfers collections and disbursements October 26 1936 October 31 1939 38 Appendix CResults of operation by Government owned lines July 1 1938June 30 1939 38 Appendix DShip construction program as of October 31 1939 39 Appendix E Characteristics of vessels under construction 46 Appendix FAbstract of formal decisions entered October 26 1938 October 25 1930 48 m LETTER OF TRANSMITTAL UNITED STATES MABITIME COMMISSION ifashington D C January 2 1940 To the Congress I have the honor to present herewith the report of the United States Maritime Commission for the year ending October 25 1939 This report is submitted pursuant to section 208 of the Merchant Marine Act 1930 as amended which provides that the Commission shall at the beginning of each regular session make a report to Con gress which shall include the results of its investigations a summary of its transactions its recommendations for legislation a statement of all receipts under this act and the purposes for which all expenditures were made The kaleidoscopic changes in the merchant marine which have taken place since September 1 1939 preclude the submission of recommendations for legislation until the effects of the European war and the Pittman Act upon our shipping can be more accurately appraised The accompanying report covers the remaining activities of the Commission for the period under review E S LAND Chairman v UNITED STATES MARITIME COMMISSION INTRODUCTION The outbreak of hostilities in Europe and the passage of the Pitt man Act by the special session of Congress which convened shortly thereafter have seriously disrupted the normal operation of the American merchant marine The immediate result has been the cessation of American flag services to all European ports from the north coast of Spain to Bergen Norway Approximately 90 cargo and passenger vessels are prevented from participating in the Ameri can flag services to these areas which have been established with the aid of the Government during the past 20 years The initial blow strikes most keenly at the ships and men whose employment is jeopardized The repercussions may well permeate our national economy Rate increases with a consequent increase in cost to the consumer have already been established in many services including those not directly affected Conference agree ments in the Atlantic trades have been temporarily suspended and as American flag services have been withdrawn the public is vulner able once more to the mounting cost of transportation which followed the outbreak of the war 25 years ago The trade areas affected by neutrality legislation and the Presidents delineation of combat zones are of vital importance to this countrys foreign trade The volume of our trade with this blockedout area amounted to approximately 3 billion dollars in 1937 or over 40 percent of the total foreign commerce Despite the presence of these factors so disturbing to the present situation the overall picture of the merchant marine is far more satisfactory than it was in 1914 Since the initiation of the Commis sions longrange construction program on October 20 1937 when the contract for the S S America was signed 28 vessels have been launched and 12 of these already are engaged in operation on essential trade routes Including those ships now in operation the Commission has contracted for 141 vessels with deadweight tonnage of 1440000 at a total contract price of 345282856 On June 30 1914 the United States had 116 vessels engaged in foreign trade only 19 of these with gross tonnage of 187000 served trans oceanic routes The American merchant marine has taken a long stride toward fulfillment of the national policy enunciated in section 101 of the Merchant Marine Act 1036 2 REPORT OF THE UNITED STATES MARITIME COMMISSION Organization During the past year there has been no change in the membership of the Commission The staff of the Commission now consists of approximately 1500 employees of which number about two thirds are located in the Washington office the remainder being employed either in district offices of the Commission in New York Norfolk New Orleans San Francisco and London England or in the super vision of the Conunissions properties including terminals and Laidup fleet The increase during the past year reflects directly the develop ment of the Commissions longrange building program In addition to the enlargement of the technical staff required to prepare plans and specifications for the ships and to supervise construction in the 15 shipyards where vessels are being built there has been a con comitant increase in the number of auditors and accountants Studies and investigations During the past year the Commission has continued its study of the many different problems existing in domestic as well as foreign commerce In 1937 the Commission published its Economic Survey of the American Merchant Marine As this dealt solely with our foreign trade the Commission then turned to a survey of coastwise and intercoastal shipping on which a report was made to Congress March 15 1939 To complete its investigation of waterborne com merce the Commission then undertook a study of inland waterways The material obtained from this investigation is now being collated and will be ready for submission to Congress during the first part of 1940 In addition to the broad surveys referred to above the Conunis sions staff is constantly engaged in the compilation of data and statistics on the vessels which comprise our merchant marine and on the shipments of which waterborne commerce is composed Im proved methods of tabulating material on these subjects now afford the Commission a more accurate and speedy analysis of the many and diverse problems which are submitted for its determination Legislation A number of important amendments to the statutes covering the Commissions activities were enacted by the last Congress Public No 116 on June 6 1939 Public No259 on August 4 1939 and Public No 328 on August 7 1939 One of the principal legislative modifi cations adopted by the Congress arose out of the Commissions recommendation for the inclusion of turnin and build provisions in the Merchant Marine Act The Economic Survey of Coastwise and Intercoastal Shipping revealed that a problem common to all operators was the replacement of old or obsolete tonnage purchased for the most part at bargain prices which attended the disposal of REPORT OF THE UNITED STATES MARITIME COMMISSION 3 the Shipping Boards wartine fleet with new vessels at todays market prices In order to facilitate the acquisition of new eco nomical tonnage section 510 of the Merchant Marine Act 1936 as amended permits an operator to turn in to the Commission vessels over 17 years of age and to receive as credit for construction or pur chase of a new vessel an amount determined by the Commission to represent a fair and reasonable value for the obsolete vessel Although a number of applications are now pending with the Commission no transaction has been consummated at this time During its last session Congress reaffirmed the policy of establishing a system for training American seamen Under prior legislation vessel personnel with maritime background and experience could receive further training by enrollment in the United States Maritime Service Recent legislation extended the program to include the training of inexperienced American citizens to serve as licensed and unlicensed personnel Through the medium of a cadet system estab lished on merchant vessels qualified young men are trained to become licensed officers To supplement the activities of the Maritime Service authorization was also granted to conduct such correspond ence courses as the Commission might deem necessary to provide adequate scope for its training program The more important of the other amendments to the Merchant Marine Act 1986 which were adopted by the last session of Congress involved the clarification of certain statutory provisions which the Commission had found to be obscure or inequitable in administra tion These included a provision basing the minimum charter hire for vessels chartered wider section 714 on the estimated foreign in stead of the American construction cost and on strengthening the Governments right to requisition